Question

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: $ Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases AA GA GA GA GA Amount 1,092,000 420 47 17 140,000 120,000 60,000 115,000 315,000 $ $ $ Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit?

Answer 1

Solution

Alpine House Inc
Traditional Format Income Statement
Sales		$ 1,092,000
Cost of goods sold		$ 260,000
Gross margin		$ 832,000
Selling and administrative expenses:
Selling expenses	$ 262,200*
Administrative expenses	$ 164,200
Total selling and administrative expenses		$ 426,400
Net operating income		$ 405,600

*(2600*47)+140000

Alpine House Inc
Contribution margin Income statement
Sales		$ 1,092,000
Less: Variable costs
Direct material used	$ 260,000
Variable selling expenses	$ 122,200
Variable administrative expenses	$ 44,200
Total Variable cost		$ 426,400
Contribution margin		$ 665,600
Less: Fixed Costs
Fixed selling expenses	$ 140,000
Fixed administrative expenses	$ 120,000
Total Fixed Costs		$ 260,000
Net Income		$ 405,600

.

Contribution margin per unit

$     256.00

Working

Sales price	$     420.00
Less: Variable material cost (260000/2600)	$     100.00
Less: Variable selling expenses	$       47.00
Less: Variable administrative expenses	$       17.00
Contribution margin	$     256.00